Narrow view – SC verdict on PMLA fails to protect personal liberty from draconian provisions

Source: This post is based on the following articles

“Narrow view – SC verdict on PMLA fails to protect personal liberty from draconian provisions” published in The Hindu on 29th July 2022.

“By upholding PMLA, SC puts its stamp on Kafka’s law” published in the Indian Express on 29th July 2022.

Syllabus: GS 3 – money-laundering and its prevention.

Relevance: About the issues surrounding PMLA.

News: The Supreme Court in Vijay Madanlal Choudhary and Ors versus Union of India case upheld the provisions of the PMLA (Prevention of Money Laundering Act).

What was the case about?

What is the Prevention of Money Laundering Act?

What are the reasons behind stringent provisions of PMLA?

There is a widespread international concern over Money Laundering. Organised crime fuelling international narcotics trade and terrorism is funded by illicit money generated from crime, laundered to look legitimate and funnelled into the financial bloodstream of global and domestic economies.

The PMLA was enacted in response to India’s global commitment under the Vienna Convention. The primary purpose of the Act was to combat money laundering in India.

Note: Vienna Convention was adopted in 1988. It was the first international instrument to address the issue of proceeds of crime and to require States to establish money laundering as a criminal offence.

How do the PMLA is different from other International counterparts?

Money laundering in the Indian context is linked to or is seen as a byproduct of a host of both grave and routine offences that are appended to the PMLA as scheduled ones.

These ‘scheduled’ or ‘predicate’ offences ought to be ideally limited to grave offences such as terrorism, narcotics smuggling, corruption and serious forms of evasion of taxes and duties.

But, in practice, the list contains offences such as fraud, forgery, cheating, kidnapping and even copyright and trademark infringements.

What are the concerns associated with PMLA?

The other issues,

1) The list of crimes included in the PMLA overrides similar crimes in other parts of the law. It can override the safeguards of the Criminal Code of Procedure, 2) The burden of proof is on the accused. Under Indian conditions, the process of proving innocence itself is the punishment, 3) International treaties are often used to override domestic rights safeguards. By fulfilling India’s global commitment under the Vienna Convention, India restricted civil liberties and the value of dissent, 4) The punishments under PMLA may potentially be excessively punitive, in disproportion to the crime, 5) The conviction rate under PMLA is very low, less than 0.5%. But every year thousands of cases are registered, people are arrested, and lives are turned upside down, and 6) The Enforcement Directorate has been manifestly selective in opening money-laundering probes, rendering any citizen vulnerable to search, seizure, and arrest at the whim of the executive. Thus, the government of the day might use the ED against political opponents.